Pilot Program Would Aid Low-income Home Buyers

Aurora — In an unusual arrangement, a coalition of eight private and public agencies are joining together to help 12 low-income families find, buy and rehabilitate old homes.

Officials of Joseph Corporation (JoCo) are heading up the coalition, which also involves the city Division of Neighborhood Redevelopment, Merchants National Bank, the Greater Aurora Association of Realtors, Chicago Title Insurance Corp., the Mortgage Guaranty Insurance Corp. and two federal home loan agencies.

The pilot program, initiated by Merchants National Bank and JoCo, was announced Tuesday. Also on Tuesday, the City Council approved the city's contribution, which includes 2 percent down-payment donations and $7,000 rehabilitation grants for the 12 homes, for a total commitment of $99,000.

Qualifying homeowners would be approved by JoCo, with the aid of the Association of Realtors, which will use three-month loans from the Federal Home Loan Bank to purchase the older homes, estimated to cost between $58,000 and $65,000. The buyers would put up 3 percent as down payment, which will be coupled with the city's 2 percent donation.

The homebuyer would then secure 30-year low cost loans through the Federal National Mortgage Association, known as Fannie Mae, which would be used to pay off the three-month purchase loan.

While the deal is pending, the city would chip in up to $7,000 and the Federal Home Loan Bank paying $5,500 for rehabilitation of each home.

Merchants National Bank would be in charge of funneling the loans from the Federal Home Loan Bank and Fannie Mae. Chicago Title Insurance Corp. would provide reduced cost closing and title services. Mortgage Guaranty Insurance Corp. would provide mortgage insurance on an easy payment plan.

If the pilot program proves successful, it would be done again in subsequent years, said Merchants National Bank Vice President Helmut J. Seifert.